All Forum Posts by: Peter Walther

You're right. But it doesn't change my reasoning. My essential point was when you are dealing with a conveyance with no warranties, which we are here as well as in the non-judicial (or quasi) foreclosure framework, that requires you to do your due diligence up front... all of it... and also to factor the unknown into your bid. So making a title claim for an unrecorded lien that, as it later turns out has priority or otherwise survives the foreclosure, that's a loser. I think we are actually in agreement on that. 

That's why I put "seller" in quotation marks. The "seller" here is an agent of the secured party who provides no warranties, claims to know nothing about the subject property and refuses to complete and execute standard title company documents. Standard ALTA owners + unrecorded lien = no pay (imo).

 Not to split hairs Tom but the high bidder gets a Certificate of Title from the Clerk of the Court who certifies the named party was the high bidder and the party to whom the property was sold.  I don't believe the Clerk is the Plaintiff's agent nor does he/she convey the property, I believe that happens by operation of law.  Sort of like when someone inherits property, title passes per statute.  It's not like a non judicial sale or a Deed of Trust foreclosure where the Trustee conveys the property.

@Peter Walther If the "seller" fails to disclose the existence of an HOA, any CCRs of record (included as special exceptions in the policy) don't reference mandatory periodic assessments, there is no recorded HOA lien, and the auction terms state that the buyer takes title subject to any existing dues or assessments, how does the title claim shake out?

My money is on a disclaimer of coverage. 

Thanks Peter, I have title insurance on the property, I expect that a title search would pick up only liens/encumbrances that have been filed against the property. Since the HOA has not filed any liens against the title, the title company would have no liability.......is that correct?

I recently purchased a SFR property near Ft Myers, FL at auction. It was a foreclosure property purchased through a sheriffs sale. I completed a normal title search and upon sale purchased a title policy. I have a clear title.

It is in a gated community, I contacted the HOA to get set up with them and now find that there is a little over $4,000.00 in back HOA fees that they are looking to me to pay. These fees go back over a year.

My question is: Has anyone had experience with a situation like this, am I am just going to get stuck paying these fees?

@Peter Walther I think there is a huge distinction when the party in possession is the former owner. Have you ever insured REO title in MA? I noted in my comment that there is a distinction (subtle but very important) in MA and other non-judicial states which is that there is an element that becomes judicial when you have to get the non-military finding. It gives the owner a judicial forum to raise challenges.

If the property is in MA you may want to consult you MA title agent or attorney. MA has a non-judicial foreclosure process. However, there is a finding of non-military service which needs to be made in the land court (done in connection with the eviction). Many defenses are raised collaterally attacking the underlying judgment so some title insurers may say it is not worth the risk. In CT we are a judicial foreclosure state so buying an occupied property doesn't pose the same risk to a title insurer. 

@Account Closed You are confusing things.

Yes, a Special Warranty Deed means the Seller is only guaranteeing/agreeing to defend, title issues while they owned it. 

Title Insurance though, has Nothing to do with the bank. It is from one of the major title insurers guaranteeing title, assuming it is clear at the time, regardless of how the property is bought. 
I have gotten title insurance, or provided it to sellers, on every property ever bought....REO's, QCD, and foreclosure suctions.
No need to confuse people with your anti bank conspiracy issues. 

@Rich Hupper You should be able to get title insurance. We have closed on 3-4 of these same types of deals here in CT during the past year and have gotten title insurance on each deal.